The first thing I always say is make sure you're sitting down with an advisor who really is trying to understand your why. The way you can tell is are they asking you about your family history, are they asking you about your journey, about how you've gotten to where you're at, how you've gotten into the seats that you're sitting there that day. Welcome to Keenan Retirement, a show dedicated to helping you thrive before and during your retirement years. If you are looking to grow and protect your wealth and want to make the second half of your life the best half, then listen in as well as advisor Bill Keen and his host sort through the key issues that you need to know in a lively and candid way.
We are here for another episode of Keenan Retirement. I'm your host Steve Sandusky and here with me as always is my good friend Bill Keen. Hey Bill. Hey, good morning Steve.
How are you doing today, Mr? I'm doing fantastic and I want to hear all about your trip. I understand you and Carissa took a recent trip out to Colorado. So tell me a little bit about that.
Yes, we did. We got in the Bonanza and we flew from downtown Kansas City out to Colorado Springs, which is about a 500 nautical mile trip across most of Kansas or all of Kansas and we stayed in a bed and breakfast up in a place called Buna Vista. The reason I say Buna Vista is because we were pretty quickly told it's not buena Vista. It's like the same word that spelled the same and it sounds different or how does that work?
I'm not sure exactly, but I was told by our Ben Breakfast host, which were the most gracious folks that the locals would know immediately that we were out of town. So you say the Buna you're at least in initially. Well, it's kind of like there's this town in California that we visited a few years ago and you look at the spelling and you might say it's, oh gosh, I'm going to get this wrong. I was going to say San Luis Obispo as opposed to San Luis Obispo.
I'm not sure which is the correct one. I think it's the same deal that if you mispronounce it, they're like, okay, you're not from here. Right, exactly. And I'm not sure what that either wins you or loses you, but at least they start to posture about who you are.
Yeah. So you had a good time there? Well, we had a great time. Couple things.
We flew over and landing at Colorado Springs Airport, which is called the Class C or Class Charlie Airport. Pretty busy place. Several commercial airlines fly out of Colorado Springs. So it was an interesting flight over a lot of flight planning that went into that trip.
In Kansas City, we're about 700 or 800 feet above sea level. And of course, over in Colorado, the runways were about 6,000 feet above sea level. So being conscious and cognizant of those things as you fly across Kansas to where Colorado, the ground rises up beneath you. And a lot of planning that goes into that, the runways over in Colorado Springs and in Denver and in the mountains in general are typically, gosh, nearly twice as long as they are in places like Kansas City because of what's called density altitude and how long it takes.
They are planning to fly off the ground. So a lot of things to plan for. I always kind of bring that up in talking about planning for retirement because, you know, when you're flying, the stakes are high and mistakes can be brutal. And it's the same thing I see in retirement and investing, thinking and planning and the behavior that goes into a long-term plan.
The runway is 150 feet wide and 13,000 feet long. And there's three runways there. So there's a lot of stuff going on. And I remember Steve, I was descending ready to make a left base to runway 17 right.
And I gave myself a little room to get acclimated with where I was. And because the runways are so wide and so long, it's an optical illusion. So I was five miles away from the airport and it looked like to me, I was only about a mile and a half. I'd have done it my GPS and saw five miles.
And about that time the tower comes on and says, yeah, Bonanza, Nain Kilo, Sierra, can you get to the numbers please? We've got two C-130s coming in number two and number three right behind you. And get to the numbers means land. Okay.
Thanks for translating. So the runway has got the runway number right at the threshold. And so they mean get to the numbers. And I said, tower Bonanza, Nain Kilo, Sierra, unfamiliar, was giving myself a little room, but we'll get to the numbers.
And so we got to the numbers. But anyway, we had a great time. One thing I might tell you too is in the planning process. We could have flown up into a Bista, but I would have navigated between 14,000 foot mountains.
And I haven't had a ton of mountain flying experience, although I definitely could have done it. We made a decision to go ahead and land in Colorado Springs and make the drive up to Bista, which was a beautiful drive anyway. Again, I'm just tying that back into thinking ahead, understanding the stakes are high. One other thing, I mentioned briefly the hosts of the bed and breakfast.
In our podcast, we talked about people that are retired and living life intentionally, Steve. Yep. These folks, and I asked their permission, I said, I wouldn't say their name, but if someone of our listeners wants to call us or email me, I'll certainly give them the information on this bed and breakfast. But these folks were from Illinois and had sold a manufacturing business about four years ago.
And they decided that their dream was to have a home right on the Arkansas River with a perfect view out the front windows of the collegiate range, more 14ers, more 14,000 foot plus mountains anywhere in Colorado, right around there. But then right out the back door is the Arkansas River. They love meeting new people. They love being hosts.
That was a dream of theirs. Years ago, they made that happen and they live there in Boonavista most of the year, but still have some business back in Illinois. But the gentleman, he teaches at a college, a local college. He's an expert in welding.
He also is in the search and rescue team there for the city. And his wife, she is on the Chamber of Commerce, a board of directors, a volunteer. And they're just deeply immersed in the community. I might mention her mother is doing well, comes up from Texas every year and stays with them in one of the suites for about four months.
So they're retired, but they're very active. They're living, I would say, live in their dream. You know what Steve? It's really inspiring when I was meeting them, I was asking them, they found out I had a podcast that I said, it's an honor getting to know you.
But I also wanted to interview you so I could bring you all up on our podcast as an example of what's possible quote post retirement. Great. And what I like about that is, you know, these are people that essentially retired from there what I'll call maybe their first career. And now they're doing something else that you almost could call this a second career.
They're staying super active. They're really engaged. And now they're doing what they want to do as opposed to what they have to do. And I would imagine this is going to keep them healthy and active and really enjoy life for probably quite a few more years from now.
I would agree. And you know, she had a long career in the pharmaceutical industry that she had retired from. And like I said, he had a manufacturing firm in the metalworking industry, steel fabrication that he sold. And I said, he's working at a local college training people on welding issues.
So what his expertise was, but now in a different fashion. I think that's awesome. They retired from something and they had something to retire to. So that's great.
Okay. I'm going to put you on the spot again. You know, I love to do this. Oh my goodness.
I mean, this is just I need to put you on the spot first next time and get you off kilter. Don't you think? Because this just continues to happen. And I'm not sure what to do about it.
Bring it on, baby. Bring it on. I don't have anybody here to help me this time either. Okay.
So here's the question. You're talking about you're in Colorado and this couple has a place on the Arkansas River. Why in the world is a river in Colorado named after a different state? Can I phone a friend?
Yeah. Because I do not know. That's a great question. Yeah, that's interesting.
I know it. I first told somebody, I think my kids, I took a picture of it and they said, hey, we're at the Colorado River's right here. And one of them quickly corrected me on that. It's just like when you're in Arizona at the Grand Canyon.
Yes. You're rafting on the Colorado River. Yes, I know. I guess that's probably because what it starts in the Colorado Rockies is where that river actually emanates from, I would imagine.
That's right. I guess they're not going to change it, are they? Right. As a country state.
All right. All right. One is, I know you've got a couple of technical issues that you want to talk about here in terms of some tax issues. These are questions that you get fairly regularly from your clients.
So we'll go through that. And then the second part of what we want to talk about today is how do you evaluate a financial advisor? That's right. Whether you're looking for a new advisor today, what kind of questions would you want to ask them?
What should you be looking for to try and ensure that you get an advisor who's really compatible with you? Or even if you have an existing advisor today, these are some things that you should be thinking about and asking yourself to make sure that you think you should be getting. That's right. Lots of good things to chat with.
So let's just start with, I know you've got a couple of tax issues that you want to talk about here first. We've had a couple of questions this last week in the practice here around these issues. And I'm always thinking ahead, saying, you know what? If I have something that's continues to repeat, I'd like to bring it up on the podcast.
They're both around taxes. The first is a lot of people will retire and move to a different state. So this last week we had clients who retired and one moved to Texas and one moved to Florida. And that's where the primary residence will be.
And although King Wealth Advisors is headquartered in Overland Park, Kansas. So the question that we received from in both these cases was, hey, if we're living in Florida or Texas or in both cases a no-state tax state, but you're sending us distributions from our IRA accounts and you're located in Kansas, will we be subject to Kansas state income tax? Really, a thoughtful question. And the answer is no.
It doesn't matter where your advisor is located or to say if you're receiving a pension, it doesn't matter where the corporation you're receiving a pension is located. What matters is your home state of residence. So I just wanted to bring that piece up as well. Another question that we get quite often is around tax withholdings.
If you've worked in a corporation over the course of your career, you're used to having your taxes withheld from your paycheck. And yes, you might have to adjust your withholdings. Be thoughtful about that. But the taxes are withheld typically every paycheck.
So that you're hopefully close to having paid in what you owe come tax time. Once you're retired, most folks think that they have to do estimate if you're working with a firm who will help you get out ahead of that and proactively produce projections and can withhold federal and state tax from your IRA distributions. If you're taking money from your IRA, there's a nuance to this. If you don't pay in enough tax to cover what your tax liability will be, there can be a penalty.
So there's something called a safe harbor rule that says if you pay in at least 100% of what you paid in the prior year, even if you owe more tax than that, there won't be a penalty. Does this make sense to you here? Yeah, it does. And I've been in that situation as well.
And that's a farber provision. Yeah. The one thing I also wanted to mention is a nuance. But if you're making over 150,000 a year, then you have to pay in 110% of what you paid in the prior year to avoid any penalty if you indeed owed more.
There's a lot of simplicity around having taxes withheld from IRA distributions and even looking at what would the tax be on other income and then upping your withholding on your IRA distributions to cover the tax on all your income that year. And that's something that in my opinion, a good financial advisor is sitting down with a client and saying, let's look at your tax obligation and let's come up with a strategy so you don't get caught short on this. And again, if you necessary to work with the client's tax advisor as well and coordinate, those are nuances. But those are things that if somebody's on the glide slope to retirement and they're getting ready to make that transition, those are details that have got to be talked about and thought through.
And again, part of the process that we go through here, but I did want to bring that up this week. Now, let's talk about how do you evaluate a financial advisor? So as I mentioned earlier, whether you are looking to hire an advisor or whether you already have an existing advisor, these are some things that you should be thinking about to help ensure that you are with a person that's really the best fit for you. So Bill, let's just kind of go down and let's sort of go down and let's sort of think are important for consumers, for investors to be thinking about as they work with an advisor.
The thing that I think is most important is for folks to be educated and engaged and participating in this process. So the first thing is one, interview multiple advisors. And I know it's a pain to go out and disclose at least some level of personal information to multiple advisors because it kind of feels like you're exposing yourself. Most people are and should be pretty private with their finances.
But it's such an important decision that I always recommend people go find and talk to at least three advisors and go through these questions that we're going to be talking about today with them. Take notes and if somebody takes it personally that you're evaluating multiple advisors, well, that's a great way to eliminate them from your process. And I'm not getting about that. So the first thing I always say is make sure you're sitting down with an advisor who really is trying to understand your why.
The way you can tell is are they asking you about your family history? Are they asking you about your journey, about how you've gotten to where you're at, how you've gotten into the seats that you're sitting there that day. There's a story behind how you've gotten to where you're at as you sit there interviewing that advisor. And are they asking you about that story?
Are they asking you how you were raised, what your feelings about things are, what your thoughts are, what your opinions are? Are they asking you how you've reacted in prior market corrections? Are they asking you your philosophies on supporting kids and parents? There's a lot that goes into an advisor truly understanding someone's why.
And it's not about just finding out how much money somebody has in the first 10 minutes. It's more about finding out about the person. Right. And if they do ask about how much money do you have, then probably just run as fast as you can the other way.
Yeah. Well, you know, eventually you have to figure that out because all the things you talk about, you have to be funded. Yeah. I was talking about that with Mitch's podcast a few episodes ago.
Of course, you eventually have to talk about the numbers, but I think our listeners kind of get what I'm saying here and you can tell when you sit down with somebody. Are they here just trying to close some sale or are they really listening to me? And I'll tell you what, this day and age, it's very difficult to find people that will actually listen to you. Steve, have you know, it's a world of distraction.
What was that, Bill? Hey, I knew you were coming back with that. You set me up well for that. Exactly.
Exactly. But when you're talking to somebody, if your mind is thinking and looking for it, you can tell what I'm talking about. So number one here is just really finding an advisor who's really interested in you and really trying to understand your why. Because they'll need to know that in order to put together a good plan and be able to effectively manage your money.
Okay. So that's number one, what about number two? Number two is work with somebody that has a belief system. And what I mean by that is somebody who can articulate what their philosophy is and what they believe, for example, would be, should you carry a mortgage into retirement at these low interest rates?
Or should you make sure you're completely debt free in retirement? And if a client asks me that, I'm going to tell them what I think. We've talked about that in prior episodes as well. It's a tax question more than it is.
A debt question as long as the debt equity ratio is in place. But I'm not going to ask the client, what do you think? And then just go along with what they think, just so they got the answer they were looking for. Clients are hiring us to have a belief system and to have a philosophy.
This is a great year to be talking about people that are chameleons, people that will change positions. You're not talking about our political scene, are you Bill? Oh my goodness. Something totally different.
Okay, got it. But people that have a belief system and can stand behind it, I think you've got to know what you believe about things. Sure. Sure.
Yes, sir. Excellent. How about number three? So the number three is work with somebody that has a checklist.
And I won't paint you by going into any analogies between this and flying. We've already done that enough on this episode. But you've got to look across the table and see somebody who's taking copious notes and somebody who has a detailed documented checklist that they will be running through with you on a continuous basis and that it's the core of a practice and a system. No one, however, smart they are can remember everything.
And I would even ask the advisor to show you an outline of what are the things you're going to be keeping track of and reminding me of over the course of our relationship so that nothing slips into the cracks. Yeah. And I know Bill, we did a blog post on the checklist driven process. So we'll make sure we link to that in the show notes.
Yes, perfect. Perfect. Great. How about number four here?
Number four is a focus on education. And it's slightly repeat of what we talked about last time because I mentioned it in the last podcast. But I want an advisor who's educated. I want that advisor to not just have the minimal education that he or she needs to maintain their licenses.
I want to know that they're out in think tank groups, that they're out at things like the Behrens conference that Matt Wilson and I attend each year where some of the top advisors in the country get together and share ideas and best practices. I want to know that they're continuous learners and that they're out thinking outside the box. I want that again from my tax advisor, from my CPA. I want it from my physician.
I want it from everybody that I consider my advisor. But I also want my advisors to educate me. So I want my tax advisor and my legal advisor to say, Bill, this is what you and your wife should be considering. I would prefer if once or twice a year they had a meeting.
I could attend a newsletter. And you know where I'm kind of going with this, Steve, is we make it a huge priority in our firm to provide ways for people to be engaged and educated. And this podcast is a very example of that. I think an informed investor and informed consumer, just like if someone's going out to buy a car, you want to do a little research before you go out and buy that car.
You want to get a little educated to make sure that you're making a good decision and you're getting good value. So that definitely works both ways. Okay. How about number five here?
The commitment to communication. No one wants to feel like that they were just a number and that they were courted and then once the courting was over, that they just got lost in the shuffle and no one cares about them. So if I was out shopping for a financial advisor, I would demand that someone give me some sort of outline of what the communication will look like, what the access to the advisors and the advisor team will look like, and how many meetings per year, what the event schedule will look like, how do we communicate back and forth and get that up front so that you never want to have your assets with somebody and feel like you're a pain. Can you imagine that, Steve?
I mean, I felt like that before with many relationships with attorneys and with CPAs and with even other doctors, you feel like you're a pain, making a call and you're the client. Right. I think you mentioned the number. I recall there's a commercial out there from a company that talks about, do you know your number?
What's your number? And I just keep thinking, I don't want to be thought of as a number. You talk about how there's not a number that you need to be looking for, that you need to save in order to retire. It's really an ongoing process, isn't it?
Well, the whole thing is a process. So it's a work in process the entire time. Life happens in your plan. Life happens in your plan.
And you've got to have advisors that are actively engaged in staying up with your life. How about number six here? I think another thing too that speaks to higher standards are working with people that are committed to having a relationship. So what I found, at least in the generations that we're working with, they want to have relationships.
And maybe the newer generations come online, Steve, will want to work through computers and Skype and not have their base-to-face relationships in the future. What I'm finding is that most of the clients we work with want to sit down and look at this in the eye. And I can relate to that because I'm 48 years old and that's what I want from my advisors as well. But commit to the relationship and also I believe that you should be able to look at your firm and there's some great people that are leaders of the firm.
It's wonderful. But he or she is also creating an environment where there's younger folks that are smart and educated that are back-filling the roles. Because at some point that leader may or may not be there. And I don't want to, somebody saw keen on retirement and they thought keen was retiring.
I had someone ask me that and see if I had that. I don't really. Yeah. I mean, it's not retiring at this time.
But I'm 48 years old probably around for 20 more years. But I do believe that an advisor should have a team. It should be a team of qualified professionals that are there in case something were to happen to the primary advisor. Just anything that there's a team to fall back on.
All right. Excellent, Bill. Well, we've shared a lot of great things here. And as folks are thinking about hiring an advisor or if you already have an advisor, Bill, you've just gone through what about six things here that you should be thinking about and asking and making sure that you get comfortable with.
Because this is a very important relationship. The relationship that you have with your financial advisor is extremely important. You're going to be talking about some very personal type issues and emotions can get involved. And so you need to make sure that you feel really good about who you're working with.
So anything else you want to add here as we wrap up, Bill? You know, the last thing, Steve, that I think is important. It would be the elephant in the room if we didn't talk about it. Know what your fees are.
Know the cost of doing business. And let me just give this advice. When you're sitting down with an advisor, I want you to ask the advisor not, what is your fee? But what are my total costs?
So there are two very different questions. So when you're making an apples to apples comparison with other advisors, you've got to have the real number. There's a lot of investments out there that have better fees and then advisor may be charged as a fee on top of the investments costs that are hidden. And commonly, we'll just quote their fee.
They won't quote the entire cost. Again, not to go on about this, but I want people to be informed and educated consumers all about transparency of the process. And I think it's very important to be armed with that question and then really be thoughtful about documenting the answer. Understand the engagement and the costs that be clear about those things.
Well, Bill, good. I think you've really shared some excellent ideas and thoughts here to really help consumers and investors out there to make sure that they are making good, solid, informed decisions when they're working with a financial professional. So thank you for sharing that. We'll get a lot of the stuff out on the show notes page as well.
So for all of you that are listening to this, if you haven't been to the website to check out the show notes, please do. Make sure you go to keenonretirement.com and you can also listen to the episode right on the, we call it the show notes page. It's essentially a blog post. But then we also highlight some of the things that we talk about here.
So if you're maybe you're in the car and you can't write anything down, you can just go straight to keenonretirement.com and you'll be able to pick up a lot of the highlights of what we're talking about here and just reinforce the learning. So Bill, thank you for what you're doing here with the podcast and it's a great honor to be part of this with you and I look forward to lots more episodes. You're welcome Steve. Me too.
We'll talk to you soon. All right, take care. The opinions expressed in this podcast are for general informational purposes only and are not intended to provide specific advice or recommendations for any individual or on any specific security. It is only intended to provide education about the financial industry.
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